The greenback continued to be supported by the 10-year US treasury yield which edged higher in early European session trading.
Against a basket of major currencies, the dollar index, which measures the strength of the greenback, traded higher at 104.80.
This was driven by a rise in US bond yields to a 4-month high to be above the 4.00% level.
As a result, it can also be seen that most of the major currencies retreated from the increases recorded previously.
The Aussie and New Zealand dollars, which had earlier received a boost from stronger Chinese manufacturing data, slipped around 0.4% and 0.6% respectively against the US dollar.
As for European currencies, the euro lost 0.3% from earlier gains as high German inflation data bolstered confidence for the European Central Bank (ECB) to extend its interest rate hikes.
Even so, investors will still focus on the release of European Zone inflation data that will be released in the European session (6.00 pm).
The pound currency almost erased all the gains recorded since the beginning of this week after being shaken by the statement of the Governor of the Bank of England (BOE), Andrew Bailey.
Bailey said the central bank is not considering any further decisions so far on interest rate hikes, leading investors to reduce expectations to see rates rise higher.
